UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

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Ramco-Gershenson Properties Trust

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RAMCO-GERSHENSON PROPERTIES TRUST

 

31500 NORTHWESTERN HIGHWAY, SUITE 300

FARMINGTON HILLS, MICHIGAN 48334

 

Dear Shareholder:

 

We invite you to attend the 2011 Annual Meeting of Shareholders of Ramco-Gershenson Properties Trust (the “Trust”). The meeting will be held on Wednesday, June 1, 2011 at The Community House, 380 S. Bates Street, Birmingham, Michigan 48009 at 9:00 a.m., Eastern time. During the 2011 annual meeting, shareholders will have the opportunity to vote on each item of business described in the enclosed notice of the 2011 annual meeting and accompanying proxy statement. Your Board of Trustees and management look forward to greeting personally those shareholders who are able to attend.

 

We have elected to furnish proxy materials to you primarily through the Internet, which expedites your receipt of materials, lowers our expenses and conserves natural resources. On or about April 21, 2011, we mailed to our shareholders of record (other than shareholders who previously requested e-mail or paper delivery of proxy materials) a notice containing instructions on how to access our 2011 proxy statement and 2010 annual report through the Internet and how to vote through the Internet. The notice also included instructions on how to receive such materials, at no charge, by paper delivery (along with a proxy card) or by e-mail. Beneficial owners received a similar notice from their broker, bank or other nominee. Please do not mail in the notice, as it is not intended to serve as a voting instrument. Notwithstanding anything to the contrary, the Trust may send certain shareholders of record a full set of proxy materials by paper delivery instead of the notice or in addition to sending the notice.

 

Your continued interest and participation in the affairs of the Trust are greatly appreciated.

 

Sincerely,

 

Dennis Gershenson

President and Chief Executive Officer

 

April 21, 2011

 

 

Your vote is important. Whether or not you plan to attend the annual meeting, we urge you to vote promptly to save us the expense of additional solicitation. If you attend the annual meeting, you may revoke your proxy in accordance with the procedures set forth in the proxy statement and vote in person.

RAMCO-GERSHENSON PROPERTIES TRUST
NOTICE OF 2011 ANNUAL MEETING OF SHAREHOLDERS
JUNE 1, 2011

 

 

 

To the Shareholders of Ramco-Gershenson Properties Trust:

 

Notice is hereby given that the 2011 Annual Meeting of Shareholders of Ramco-Gershenson Properties Trust will be held on Wednesday, June 1, 2011 at The Community House, 380 S. Bates Street, Birmingham, Michigan 48009 at 9:00 a.m., Eastern time, for the following purposes:

 

 

The Board recommends a vote FOR each of the Trustee nominees listed in this proxy statement, FOR the ratification of Grant Thornton’s appointment, FOR the advisory approval of the compensation of our named executive officers, and FOR an advisory vote on named executive officer compensation every year.

 

The accompanying proxy statement, which forms a part of this Notice of 2011 Annual Meeting of Shareholders, contains additional information for your careful review. A copy of the Trust’s annual report for 2010 is also enclosed. Shareholders of record of the Trust’s common shares of beneficial interest at the close of business on April 6, 2011 are entitled to receive notice of, and to vote at, the annual meeting and any adjournment or postponement thereof.

 

By Order of the Board of Trustees

 

Gregory R. Andrews
Chief Financial Officer and Secretary

 

 

Your vote is important. Whether or not you plan to attend the annual meeting, we urge you to vote promptly to save us the expense of additional solicitation. If you attend the annual meeting, you may revoke your proxy in accordance with the procedures set forth in the proxy statement and vote in person.

 

TABLE OF CONTENTS

 

 

RAMCO-GERSHENSON PROPERTIES TRUST

 

31500 NORTHWESTERN HIGHWAY, SUITE 300

FARMINGTON HILLS, MICHIGAN 48334

 

 

PROXY STATEMENT

 

 

2011 ANNUAL MEETING OF SHAREHOLDERS

 

 

 

The Board of Trustees (the “Board”) of Ramco-Gershenson Properties Trust (the “Trust”) is soliciting proxies for use at the 2011 annual meeting of shareholders of the Trust and any adjournment or postponement thereof. The annual meeting will be held at The Community House, 380 S. Bates Street, Birmingham, Michigan 48009 on Wednesday, June 1, 2011 at 9:00 a.m., Eastern time.

 

On or about April 21, 2011, the Trust mailed to its shareholders of record of the Trust’s common shares of beneficial interest (the “Shares”), other than shareholders who previously requested e-mail or paper delivery of proxy materials, a notice (the “Notice”) containing instructions on how to access this proxy statement and the 2010 annual report through the Internet. Beneficial owners received a similar notice from their broker, bank or other nominee. In addition, on or about April 21, 2011, the Trust and brokers, banks and other nominees began mailing or e-mailing the proxy materials to shareholders of record who previously requested such delivery. Notwithstanding anything to the contrary in this proxy statement, the Trust may send certain shareholders of record a full set of proxy materials by paper delivery instead of the Notice or in addition to sending the Notice.

 

 

What is the purpose of the 2011 annual meeting of shareholders?

 

At the 2011 annual meeting, shareholders will act upon the matters outlined in the accompanying Notice of Meeting, including:

 

 

The Board recommends a vote FOR each of the Trustee nominees listed in this proxy statement, FOR the ratification of Grant Thornton’s appointment, FOR the advisory approval of the compensation of our named executive officers, and FOR an advisory vote on named executive officer compensation every year.

 

We are not aware of any other matters that will be brought before the shareholders for a vote at the annual meeting. If any other matter is properly brought before the meeting, your signed proxy card gives authority to your proxies to vote on such matter in their best judgment. The proxy holders named in the proxy card will vote as the Board recommends or, if the Board gives no recommendation, in their own discretion.

In addition, management will report on the performance of the Trust and will respond to questions from shareholders. The Trust expects that representatives of Grant Thornton will be present at the annual meeting and will be available to respond to questions. Such representatives will also have an opportunity to make a statement.

 

Who is entitled to vote?

 

Only record holders of Shares at the close of business on the record date of April 6, 2011 are entitled to receive notice of the annual meeting and to vote the Shares that they held on the record date. Each outstanding Share is entitled to one vote on each matter to be voted upon at the annual meeting.

 

What constitutes a quorum?

 

The presence at the annual meeting, in person or by proxy, of the holders of a majority of the Shares outstanding on the record date will constitute a quorum for all purposes. As of the record date, 38,805,576 Shares were outstanding. Broker non-votes (defined below), and proxies marked with abstentions or withhold votes, will be counted as present in determining whether or not there is a quorum.

 

What is the difference between holding Shares as a shareholder of record and a beneficial owner?

 

Shareholders of Record. If your Shares are registered directly in your name with the Trust’s transfer agent, American Stock Transfer & Trust Company, you are considered the shareholder of record with respect to those Shares, and the applicable proxy materials are being sent directly to you by the Trust. As the shareholder of record, you have the right to grant your voting proxy directly to the Trust through the enclosed proxy card, through the Internet or by telephone, or to vote in person at the annual meeting.

 

Beneficial Owners. Many of the Trust’s shareholders hold their Shares through a broker, bank or other nominee rather than directly in their own name. If your Shares are so held, you are considered the beneficial owner of Shares, and the applicable proxy materials are being forwarded to you by your broker, bank or nominee who is considered the shareholder of record with respect to those Shares. As the beneficial owner, you have the right to direct your broker, bank or nominee on how to vote and are also invited to attend the annual meeting. However, since you are not the shareholder of record, you cannot vote these Shares in person at the annual meeting unless you obtain a proxy from your broker, bank or nominee and bring such proxy to the annual meeting. Your broker, bank or nominee has enclosed voting instructions for you to use in directing the broker, bank or nominee on how to vote your Shares.

 

Why did many shareholders receive a Notice in the mail regarding the Internet availability of proxy materials this year instead of a full set of proxy materials?

 

The Trust has elected to furnish proxy materials to you primarily through the Internet, which expedites the receipt of materials, lowers our expenses and conserves natural resources. If you received the Notice containing instructions on how to access this proxy statement and the 2011 annual report through the Internet, please do not mail in the Notice, as it is not intended to serve as a voting instrument.

 

How can I access the Trust’s proxy materials and annual report on Form 10-K?

 

The “Investor Info — SEC Filings” section of the Trust’s website, www.rgpt.com, provides access, free of charge, to SEC reports as soon as reasonably practicable after the Trust electronically files such reports with, or furnishes such reports to, the SEC, including proxy materials, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports. In addition, a copy of the Trust’s Annual Report on Form 10-K for the year ended December 31, 2010 will be sent to any shareholder, without charge, upon written request sent to the Trust’s executive offices: Investor Relations, Ramco-Gershenson Properties Trust, 31500 Northwestern Highway, Suite 300, Farmington Hills, MI 48334. Further, the SEC maintains a website that

contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, including the Trust, at www.sec.gov.

 

As noted above, most shareholders will receive a Notice with instructions on how to view the proxy materials and annual report for 2010 through the Internet (at www.proxyvote.com). The Notice includes a control number that must be entered on the Internet in order to view the proxy materials. The Notice also describes how to receive the proxy materials by paper delivery or e-mail. You can elect to receive future proxy materials by e-mail at no charge by voting using the Internet and, when prompted, indicate you agree to receive or access shareholder communications electronically in future years. If you would like additional paper copies without charge, please send a written request to Investor Relations, Ramco-Gershenson Properties Trust, 31500 Northwestern Highway, Suite 300, Farmington Hills, MI 48334.

 

The references to the website addresses of the Trust and the SEC in this proxy statement are not intended to function as a hyperlink and, except as specified herein, the information contained on such websites are not part of this proxy statement.

 

Can I vote my Shares in person at the annual meeting?

 

Even if you plan to be present at the meeting, the Trust encourages you to vote your Shares prior to the meeting.

 

You will need to present photo identification, such as a driver’s license, and proof of Share ownership as of the record date when you arrive at the meeting. If you hold your Shares through a bank, broker or other holder of record and you plan to attend the annual meeting, you must present proof of your ownership of Shares, such as a bank or brokerage account statement, in order to be admitted to the meeting. No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the annual meeting.

 

Shareholders of Record. If you are a shareholder of record and attend the annual meeting, you can deliver your completed proxy card or vote by ballot in person at the annual meeting.

 

Beneficial Owners. If you hold your Shares through a broker, bank or other nominee and want to vote such Shares in person at the annual meeting, you must obtain a proxy from your broker, bank or other nominee giving you the power to vote such Shares and bring such proxy to the annual meeting.

 

Can I vote my Shares without attending the annual meeting?

 

By Mail. If you received your annual meeting materials by paper delivery, you may vote by completing, signing and returning the enclosed proxy card or voting instruction card. Please do not mail in the Notice, as it is not intended to serve as a voting instrument.

 

By telephone. If you received your annual meeting materials by paper delivery, you may vote by telephone as indicated on your enclosed proxy card or voting instruction card.

 

Through the Internet. You may vote through the Internet as instructed on your Notice, proxy card, voting instruction card, or e-mail notification. In order to vote through the Internet, you must enter the control number set forth in your Notice, proxy card, voting instruction card, or e-mail notification. If you do not have any of these materials and are a shareholder of record, you may contact Ramco Investor Relations (248-350-9900) to request a proxy card (which will include your control number) to be mailed to your address on record or an e-mail with your control number to be sent to your e-mail address on record. If you do not have any of these materials and are a beneficial owner, you must contact your broker, bank or other nominee to obtain your control number.

 

Can I change my vote?

 

Shareholders of Record. You can change your vote at any time before the proxy is exercised by filing with the Secretary of the Trust either a notice revoking the proxy or a new proxy that is dated later than the proxy card. You

can also change your vote through the Internet, by telephone or by taking action at the annual meeting. If you attend the annual meeting, the individuals named as proxy holders in the enclosed proxy card will nevertheless have authority to vote your Shares in accordance with your instructions on the proxy card unless you properly file such revocation notice or new proxy.

 

Beneficial Owners. If you hold your Shares through a bank, broker or other nominee, you should contact such person prior to the time such voting instructions are exercised.

 

What does it mean if I receive more than one proxy card or voting instruction card?

 

If you receive more than one proxy card or voting instruction card, it means that you have multiple accounts with banks, brokers, other nominees and/or the Trust’s transfer agent. Please take action with respect to each proxy card and voting instruction card that you receive. The Trust recommends that you contact such persons to consolidate as many accounts as possible under the same name and address.

 

What if I do not vote for some of the items listed on my proxy card or voting instruction card?

 

Shareholders of Record. Proxies that are properly executed without voting instructions on certain matters will be voted in accordance with the recommendations of the Board on such matters.

 

Beneficial Owners. If you hold your Shares in street name through a broker, bank or other nominee and do not provide voting instructions for any or all matters, such nominee will determine if it has the discretionary authority to vote your Shares. Under applicable law and New York Stock Exchange (“NYSE”) rules and regulations, brokers have the discretion to vote on routine matters, such as the ratification of the appointment of the Trust’s independent registered public accounting firm, but do not have discretion to vote on non-routine matters. For all other matters at the 2011 annual meeting, the Trust believes that your bank, broker or nominee will be unable to vote on your behalf if you do not instruct them how to vote your Shares. If you do not provide voting instructions, your Shares will be considered “broker non-votes” with regard to the non-routine proposals because the broker will not have discretionary authority to vote thereon. Therefore, it is very important for you to vote your Shares for each proposal.

 

What vote is required to approve each item?

 

Proposal 1 — Election of Trustees. The two nominees who receive the most votes cast “FOR” at the annual meeting will be elected as Trustees. The Board’s slate of nominees consists of Arthur Goldberg and Mark Rosenfeld, each nominated for a one-year term ending at the 2012 annual meeting of shareholders. Withheld votes and broker non-votes will have no effect on the outcome of the vote.

 

Proposal 2 — Ratification of Appointment of Independent Registered Public Accounting Firm. The affirmative vote of a majority of the votes cast at the annual meeting will be necessary to ratify the Audit Committee’s appointment of Grant Thornton as the Trust’s independent registered public accounting firm for the year ending December 31, 2011. Abstentions will have no effect on the outcome of the vote.

 

Proposal 3 — Advisory Approval of the Compensation of Our Named Executive Officers. The affirmative vote of a majority of the votes cast at the annual meeting will be necessary to approve the compensation of our named executive officers. Abstentions and broker non-votes will have no effect on the outcome of the vote.

 

Proposal 4 — Advisory Approval as to the Frequency of Having an Advisory Vote on the Compensation of Our Named Executive Officers. The option of one year, two years or three years that receives the highest number of votes cast by shareholders will be deemed the shareholder recommendation as to the frequency of having an advisory vote on the compensation of our named executive officers. Abstentions and broker non-votes will have no effect on the outcome of the vote.

Other Matters. If any other matter is properly submitted to the shareholders at the annual meeting, its adoption will generally require the affirmative vote of a majority of the votes cast at the annual meeting. The Board does not propose to conduct any business at the annual meeting other than as stated above.

 

Although the advisory votes in Proposal Nos. 2, 3 and 4 are not binding on the Trust, the Board and/or respective Committee will take your vote into consideration in determining future activities.

 

How do I find out the voting results?

 

We intend to announce preliminary voting results at the annual meeting and to disclose the final voting results in a current report on Form 8-K within four business days of the annual meeting.

 

The following table sets forth information regarding the beneficial ownership of the Shares as of April 6, 2011 with respect to (i) each Trustee, nominee and named executive officer, (ii) all of our Trustees and executive officers as a group, and (iii) to our knowledge, each beneficial owner of more than 5% of the outstanding Shares. Unless otherwise indicated, each owner has sole voting and investment powers with respect to the Shares listed below.

 

 

 

 

 

 

The Board currently consists of nine Trustees serving three-year staggered terms. However, the Board approved the declassification of the Board in June 2010 following shareholder approval of the Board’s declassification proposal at the 2010 annual meeting of shareholders. Beginning with the 2011 annual meeting, the successors to the Trustees whose term expires at such meeting will be elected for a one-year term. Therefore, the Board will be fully declassified beginning with the 2013 annual meeting.

 

Two Class II Trustees are to be elected at the 2011 annual meeting to serve until the annual meeting of shareholders in 2012 and until their successors are duly elected and qualified or until any such Trustee’s earlier resignation, retirement or other termination of service. The two nominees who receive the most votes cast at the annual meeting will be elected as Trustees. The Board has re-nominated Arthur Goldberg and Mark Rosenfeld. David Nettina was not re-nominated and the Board has reduced the size of the Board to eight members effective as of the annual meeting.

 

The Board recommends that you vote FOR the re-election of the Board’s nominees.

 

Each of the nominees has consented to serve a one-year term and has consented to be named in this proxy statement. If for any reason any of the nominees becomes unavailable for election, the Board may designate a substitute nominee. In such case, the persons named as proxies in the accompanying proxy card will vote for the Board’s substitute nominee. Alternatively, the Board may reduce the size of the Board or leave the position vacant.

 

The Trustees and nominees of the Trust are as follows:

 

 

 

As a fully integrated self-administered, publicly-traded REIT which owns, develops, acquires, manages and leases community shopping centers in the Midwestern, Southeastern and Mid-Atlantic regions of the United States, the Trust’s business involves a wide range of real estate, financing, accounting, management and financial reporting issues. In light of the Trust’s business and structure, the Nominating and Governance Committee considers the experience, mix of skills, independence from management and other qualities of the Trustees and nominees to ensure appropriate Board composition. In particular, the Nominating and Governance Committee believes that Trustees and nominees with the following qualities and experiences can assist in meeting this goal:

 

Senior Leadership Experience. Trustees with experience in significant leadership positions provide the Trust with perspective in analyzing, shaping and overseeing the execution of operational, organizational, and strategic issues at a senior level. Further, such persons have a practical understanding of balancing operational and strategic goals and risk management. Through their service as top leaders at other organizations, they also have access to important sources of market intelligence, analysis and relationships that benefit the Trust.

 

Business Entrepreneurship and Transactional Experience. Trustees who have a background in entrepreneurial businesses and growth transactions can provide insight into developing and implementing strategies for entering into new business segments, partnering in joint ventures, and/or growing via mergers and acquisitions. Further, they have a practical understanding of the importance of “fit” with the Trust’s culture and

strategy, the valuation of transactions and business opportunities, and management’s plans for integration with existing operations.

 

Financial and Accounting Experience. An understanding of the financial markets, corporate finance, accounting requirements and regulations, and accounting and financial reporting processes allows Trustees to understand, oversee and advise management with respect to the Trust’s operating and strategic performance, capital structure, financing and investing activities, financial reporting and internal control of such activities. The Trust seeks to have a number of Trustees who qualify as audit committee financial experts, and expect all of the Trustees to be financially knowledgeable.

 

Real Estate Experience. An understanding of real estate issues, particularly with respect to real estate investment trusts, real estate development, community shopping centers, and key tenants, brings critical industry-specific knowledge and experience to our board. Education and experience in the real estate industry is useful in understanding the Trust’s acquisition, development, leasing and management of shopping centers, and the competitive landscape of its industry.

 

Public Company Board Experience. Trustees who serve, or have served, on other public company boards can offer advice and insights with regard to the dynamics and operation of a board of trustees, the relations of a board to the CEO and other management personnel, the importance of particular agenda and oversight matters, and oversight of a changing mix of strategic, operational, and compliance-related matters.

 

The following sets forth the business experience during at least the past five years of each Board nominee and each of the Trustees whose term of office will continue after the annual meeting. The years of Trustee service include service for the Trust’s predecessors. In addition, the following includes, for each Trustee, a brief discussion of the specific experiences, qualifications, attributes and skills that led to the conclusion that each of the Trustees should continue to serve on the Board in light of the goals set forth above.

 

Arthur H. Goldberg has been a Trustee since 1988 and is an independent Trustee. Mr. Goldberg qualifies as a financial expert under SEC rules based on the experiences described below.

 

Mr. Goldberg has been a Managing Director of Corporate Solutions Group, LLC, an investment banking and advisory firm, since January 2002. Mr. Goldberg served as President of Manhattan Associates, LLC, a merchant and investment banking firm, from 1994 to 2002 and as Chairman of Reich & Company, Inc. (formerly Vantage Securities, Inc.), a securities and investment brokerage firm, from 1990 to 1993. Mr. Goldberg has also served in leadership positions of other investment banking and brokerage firms. This experience has provided Mr. Goldberg with a broad perspective on investment banking, capital markets, finance and accounting, and mergers and acquisitions, and enables him to provide key market insights to our Board. Further, his significant investment banking experience, relationships and familiarity with public equity offerings and transactional matters have been invaluable to the Trust in its capital raising and acquisition and disposition activities.

 

Mr. Goldberg also has extensive Board and Board committee experience at other public companies, including his current service on the Board of Directors of Avantair, Inc. (formerly known as Ardent Acquisition Corp.) since 2003 (currently chair of the Compensation Committee and a member of the Audit Committee). He also served on the Board of Directors of North Shore Acquisition Corp. from November 2007 to August 2009 and Atlantic Realty Trust from May 1996 to April 2006.

 

Mr. Goldberg’s knowledge of the Trust and its culture based on his 23 years of service, combined with the attributes noted above, led the Nominating and Governance Committee to conclude Mr. Goldberg should continue to serve as a member of our Board.

 

Mark K. Rosenfeld has been a Trustee since 1996 and is an independent Trustee. Mr. Rosenfeld qualifies as a financial expert under SEC rules based on the experiences described below.

 

Mr. Rosenfeld has been Chairman and Chief Executive Officer of Wilherst Developers Inc., a real estate development firm, since July 1997. Mr. Rosenfeld was an employee with Jacobson Stores Inc., a retail fashion merchandiser, from 1972 to 1996, including serving as President and Chief Operating Officer from 1992 to 1993,

President and Chief Executive Officer from 1992 to 1993 and Chairman of the Board (where he served as a member of the executive committee) and Chief Executive Officer from 1993 to 1996. In his various executive roles with Jacobson Stores, the Chief Financial Officer reported directly to Mr. Rosenfled on finance and accounting matters. This experience has provided Mr. Rosenfeld with a broad perspective on the retail industry, executive management, Board leadership, and accounting and finance. Mr. Rosenfeld has also served in leadership positions in the retail industry, including as a director of the National Retail Federation Board and a member of the Executive Committee of the Michigan Retailers Association. All of the foregoing has provided Mr. Rosenfeld with key industry-specific knowledge of real estate development, management and leasing, and general real estate industry issues, which enables him to provide key market insights to our Board.

 

Mr. Rosenfeld’s knowledge of the Trust and its culture based on his 15 years of service, combined with the attributes noted above, led the Nominating and Governance Committee to conclude Mr. Rosenfeld should continue to serve as a member of our Board.

 

Stephen R. Blank has been a Trustee since 1988, including as Chairman of the Board since September 2009, and previously as Lead Trustee of the Board from June 2006 to September 2009. Mr. Blank is an independent Trustee and qualifies as a financial expert under SEC rules based on the experiences described below.

 

Mr. Blank has been a Senior Fellow, Finance at the Urban Land Institute since December 1998. Mr. Blank has also served in leadership positions with firms involved in the real estate investment banking industry. This experience has provided Mr. Blank with a broad perspective on real estate industry issues, and enables him to provide key market insights to our Board.

 

Mr. Blank was a Managing Director — Real Estate Investment Banking of CIBC Oppenheimer Corp. from 1993 to 1998, Managing Director of Cushman & Wakefield, Inc.’s Real Estate Corporate Finance Department from 1989 to 1993, Managing Director — Real Estate Investment Banking of Kidder, Peabody & Co., Incorporated from 1979 to 1989, and Vice President, Direct Investment Group of Bache & Co., Incorporated from 1973 to 1979. Mr. Blank’s significant investment banking experience, relationships and familiarity with public equity offerings have been invaluable to the Trust in its capital raising activities in recent years.

 

Through Mr. Blank’s significant leadership roles on the Board since June 2006, including his role as chair of the Trust’s Audit Committee and as a member of its Compensation Committee, he has facilitated the Board’s ability to perform its critical oversight function and such authority has given him critical insights to the Trust’s operations, organization and strategy. Mr. Blank also has extensive Board and Board committee experience at other public companies. Mr. Blank has served on the Board of Directors of MFA Investments, Inc., a real estate investment trust, since 2002 (currently the chair of its Audit Committee and a member of its Compensation Committee), and Home Properties, Inc., an apartment real estate investment trust, since January 2009 (currently the chair of its Audit Committee and a member of its Compensation Committee; provided, however, after Home Properties, Inc’s May 2011 annual meeting, Mr. Blank expects to be placed on its Nominating and Governance Committee and removed from its Compensation Committee). He previously served on the Board of Directors of BNP Residential Properties, Inc. from May 1999 to February 2007 and Atlantic Realty Trust from May 1996 to April 2006.

 

Mr. Blank’s knowledge of the Trust and its culture based on his 23 years of service, as well as the attributes noted above, led the Nominating and Governance Committee to conclude Mr. Blank should continue to serve as a member of our Board.

 

Matthew L. Ostrower has been a Trustee since 2009 and is an independent Trustee.

 

Mr. Ostrower has been a Managing Director and Associate Director of Research at Morgan Stanley since 2010.  Mr. Ostrower was a member of Morgan Stanley’s Equity Research department from July 2000 to April 2008, where he served as a Vice President, Executive Director and as a Managing Director responsible for coverage of REITs, publishing research opinions and investment recommendations from 2000 to 2006. Mr. Ostrower assumed leadership of the REIT research group in 2006 and initiated coverage of a wider range of companies. Mr. Ostrower also served as analyst and then portfolio manager of Pioneer Real Estate Shares mutual fund from 1996 to 2000 and is a Chartered Financial Analyst. Mr. Ostrower’ significant knowledge and experience

regarding REIT equity investing, finance, the securities industry and general real estate industry issues has been particularly important in the Trust’s capital raising activities and ensuring alignment with shareholders.

 

Mr. Ostrower’s attributes noted above led the Nominating and Governance Committee to conclude Mr. Ostrower should continue to serve as a member of our Board.

 

Joel M. Pashcow has been a Trustee since 1980 and is an independent Trustee.

 

Mr. Pashcow has been a Managing Member of Nassau Capital LLC, a real estate and securities investment firm, since April 2006. This experience has provided Mr. Pashcow with a broad perspective on REIT equity investing, finance, the securities industry and general real estate industry issues and enables him to provide key market insights to our Board, which has been particularly important in the Trust’s capital raising activities and ensuring alignment with shareholders.

 

Mr. Pashcow served as Chairman of the predecessor of the Trust from 1988 to May 1996. Mr. Pashcow also has prior Board service and leadership experience, serving as Chairman of the Board of Trustees of Atlantic Realty Trust, a real estate investment trust, from May 1996 to April 2006.

 

Mr. Pashcow’s knowledge of the Trust and its culture based on his 31 years of service, as well as the attributes noted above, led the Nominating and Governance Committee to conclude Mr. Pashcow should continue to serve as a member of our Board.

 

Dennis E. Gershenson has been a Trustee since 1996, including as Chairman of the Board from June 2006 to September 2009.

 

Mr. Gershenson has been President and Chief Executive Officer of the Trust since May 1996. He served as Vice President — Finance and Treasurer of Ramco-Gershenson, Inc. from 1976 to 1996 and arranged the financing of Ramco’s initial developments, expansions and acquisitions. As the principal executive officer of the Trust for 15 years and as an executive for an additional 20 years, Mr. Gershenson has a unique perspective and understanding of the Trust’s business, culture and history, having led the Trust through many economic cycles, internal and external growth and curtailment, and other key operational and strategic initiatives. His day-to-day leadership of the Trust gives him critical insights into the Trust’s operations, strategy and competition, and enables him to assist the Chairman of the Board to ensure the Board’s ability to perform its critical oversight function. He also has a broad perspective on real estate industry issues generally.

 

Mr. Gershenson has served as Regional Director of the International Council of Shopping Centers, also known as the “ICSC,” which has provided him with key market insights and significant relationships. Mr. Gershenson also has other Board and Board committee experience at a REIT through his service as a member of the Board of Directors of National Retail Properties, Inc. since February 2008 (currently a member of its Governance and Nominating and Compensation Committees); Mr. Gershenson determined not to seek re-nomination and such service will end at the company’s 2011 annual meeting.

 

Mr. Gershenson also has served in many leadership roles of various charitable organizations. Mr. Gershenson is a member of the Board of Directors of Oakland Family Services and the Board of Governors of Cranbrook Academy of Art. He is a former Chairman of the Board of Directors of Hospice of Michigan and served on the Board of Directors of the Merrill Palmer Institute and the Metropolitan Affairs Coalition.

 

Mr. Gershenson’s knowledge of the Trust and its culture based on his 35 years of service, as well as the attributes noted above, led the Nominating and Governance Committee to conclude Mr. Gershenson should continue to serve as a member of our Board.

 

Robert A. Meister has been a Trustee since 1996 and is an independent Trustee.

 

Mr. Meister has extensive Board and Board committee experience at other public companies. Mr. Meister has been a member of the Board of Trustees of Centerline Holding Company since November 2003 (currently a member of its Nominating and Governance and Compensation Committees). From March 1991 to January 2010, Mr. Meister was the Vice Chairman of Aon Group, Inc., an insurance brokerage, risk consulting, reinsurance

and employee benefits company and a subsidiary of Aon Corporation. Mr. Meister became Vice Chairman Emeritus of Aon Group, Inc. in January 2010. He also served on the Board of Directors of Universal Health Services, Inc. from July 2004 to May 2008. This experience has provided Mr. Meister with significant executive management and Board leadership experience and extensive knowledge of risk management and insurance generally, which has been critical to the Trust’s business.

 

Mr. Meister’s knowledge of the Trust and its culture based on his 15 years of service, as well as the attributes noted above, led the Nominating and Governance Committee to conclude Mr. Meister should continue to serve as a member of our Board.

 

Michael A. Ward has been a Trustee since 2006 and is an independent Trustee.

 

Mr. Ward is currently a private investor but has 45 years of providing leadership to the Trust through executive management and Board service. He served as Executive Vice President and Chief Operating Officer of the Trust from 1996 to 2005, as well as Executive Vice President of Ramco-Gershenson, Inc. from 1966 to 1996. As an executive officer of the Trust for almost 40 years, Mr. Ward has a unique perspective and understanding of the Trust’s business, culture and history, having provided leadership through many economic cycles, internal and external growth and curtailment, and other key operational and strategic initiatives. He also has a broad perspective on leasing, development and real estate industry issues generally.

 

Mr. Ward’s knowledge of the Trust and its culture based on his 45 years of service led the Nominating and Governance Committee to conclude Mr. Ward should continue to serve as a member of our Board.

 

 

The NYSE listing standards set forth objective requirements for a Trustee to satisfy, at a minimum, in order to be determined independent by the Board. In addition, the NYSE listing standards require the Board to consider all relevant facts and circumstances, including the Trustee’s commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, and such other criteria as the Board may determine from time to time. The Board has determined, after considering all of the relevant facts and circumstances, that each of Messrs. Blank, Goldberg, Meister, Nettina, Ostrower, Pashcow, Rosenfeld and Ward are independent Trustees and therefore the Trust satisfies the requirements of the NYSE listing standards and the Trust’s Corporate Governance Guidelines that at least a majority of the Trustees be independent. In particular, the Board considered the following matters:

 

 

The Audit Committee, Compensation Committee, and Nominating and Governance Committee are composed entirely of independent Trustees. In addition, after considering all of the relevant facts and circumstances, the Board has determined that each member of the Audit Committee qualifies under the Audit Committee independence standards established by the SEC and the NYSE.

 

The Board of Trustees

 

General

 

The Board has general oversight responsibility of the Trust’s affairs and the Trustees, in exercising their fiduciary duties, represent and act on behalf of the shareholders. Although the Board does not have responsibility for the Trust’s day-to-day management, it stays regularly informed about the Trust’s business and provides guidance to management through periodic meetings and other informal communications. The Board is significantly involved in, among other things, the Trust’s strategic and financial planning process, leadership development, as well as other functions carried out through the Board committees as described below. The Board, led by the Nominating and Governance Committee, also performs an annual performance review of the Board and individual Trustees.

 

Board Leadership

 

Mr. Blank has served as the independent Chairman of the Board since September 2009. From June 2006 to September 2009, Mr. Gershenson was the Chairman of the Board and Mr. Blank served as Lead Trustee.

 

The Board does not have a specific policy on whether the Chairman should be a non-employee Trustee or if the Chairman and Chief Executive Officer positions should be separate. In accordance with the Corporate Governance Guidelines, if the Chairman is also the Chief Executive Officer of the Trust, then one of the independent members of the Board will be named as Lead Trustee and have the responsibilities set forth below. The Board believes either circumstance provides sufficient checks and balances and is appropriate to further the interests of shareholders of the Trust. Further, in either case, the Board believes that its independent Trustees, who represent eight of nine members of the Board, are deeply engaged and provide significant independent leadership and direction given their executive and Board experience. See “Proposal 1-Election of Trustees — Trustee Background and Qualifications” above. The independent Trustees are the sole members of the Audit, Compensation, and Nominating and Governance committees, which oversee critical matters of the Trust such as the integrity of the Trust’s financial statements, the compensation of executive management, the nomination and evaluation of Trustees, and the development and implementation of the Trust’s corporate governance policies and structures. The independent Trustees also meet regularly in executive session at Board and committee meetings and have access to independent advisors as they deem appropriate. Management supports this oversight role through its tone-at-the-top and open communication.

 

If there is a Lead Trustee, the Lead Trustee is to be elected annually (or at any time there is a vacancy) by the independent Trustees after consultation with the Nominating and Governance Committee and must be fully independent of management of the Trust. The term of the Lead Trustee’s service will commence upon his or her election and conclude upon the occurrence of the Trust’s next regularly scheduled meeting of shareholders. The Lead Trustee may be removed at any time by action of a majority of the independent Trustees. The Lead Trustee, if any, will:

 

 

Oversight of Risk Management

 

The Board oversees the Trust’s risk management. This oversight is administered primarily through:

 

 

Meetings

 

In 2010, the Board held seven meetings. Non-management Trustees hold regularly scheduled executive sessions in which non-management Trustees meet without the presence of management. These executive sessions generally occur around regularly scheduled meetings of the Board. Mr. Blank presides at such executive sessions.

 

Trustees are expected to attend all Board and committee meetings, as well as the Trust’s annual meeting of shareholders. In 2010, all of the Trustees attended at least 75% of the aggregate of the meetings of the Board and all committees of the Board on which they served. All of the Trustees attended the 2010 annual meeting of shareholders.

 

 

The Board has delegated various responsibilities and authority to Board committees and each committee regularly reports on its activities to the Board. Each committee, except the Executive Committee, has regularly scheduled meetings. Each committee operates under a written charter approved by the Board, which is reviewed annually by the respective committees and the Board and is available on the Trust’s website under “Investor Info — Corporate Overview — Governance Documents” at www.rgpt.com. The table below sets forth the current membership and 2010 meeting information for the four standing committees of the Board:

 

 

 

(1) Mr. Nettina will no longer be serving as a director as of the 2011 annual meeting, and the Audit Committee will consist of three members as of such time.

 

Audit Committee

 

The Trust has a separately-designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee is responsible for providing independent, objective oversight and review of the Trust’s consolidated financial statements, the Trust’s system of internal controls, the Trust’s risk management system, the qualifications, performance and independence of the Trust’s independent registered public accounting firm, the performance of the Trust’s internal audit function and the Trust’s compliance with legal and regulatory requirements. The Audit Committee also has the sole authority and responsibility to appoint, determine the compensation of, evaluate and, when appropriate, replace the Trust’s independent registered public accounting firm. See “Audit Committee Disclosure,” “Report of the Audit Committee” and the Audit Committee’s charter for additional information on the responsibilities and activities of the Audit Committee.

 

The Board has determined that Messrs. Blank, Goldberg, Nettina and Rosenfeld are each financially literate and have the accounting or related financial management expertise in accordance with NYSE listing standards, and are each an audit committee financial expert as defined in the rules and regulations of the SEC. See “Proposal 1-Election of Trustees — Trustee Background and Qualifications” for a description of their relevant business experience. The designation of an “audit committee financial expert” does not impose upon such person any duties, obligations or liabilities that are greater than are generally imposed on such person as a member of the Audit Committee and the Board, and such designation does not affect the duties, obligations or liabilities of any other member of the Audit Committee or the Board.

 

Compensation Committee

 

The Compensation Committee administers the executive compensation program of the Trust. The Compensation Committee’s responsibilities include recommending and overseeing compensation and benefit plans and policies, approving equity grants and otherwise administering share-based plans, and reviewing annually all compensation decisions relating to the Trust’s executive officers. The Compensation Committee also reviews and discusses, at least annually, the relationship between risk management policies and practices, corporate strategy and the Trust’s compensation programs. See “Compensation Discussion and Analysis,” “Compensation Committee Report” and the Compensation Committee’s charter for additional information on the responsibilities and activities of the Compensation Committee.

 

Role of Management. Similar to prior years, the Compensation Committee took significant direction from the recommendations of Mr. Gershenson with respect to the design and implementation of the Trust’s 2010 executive compensation program. See “Compensation Discussion and Analysis — Process for Making Compensation Determinations — Advisors Utilized in Compensation Determinations” for further information.

 

Role of Compensation Consultant. The Compensation Committee has the sole authority to engage outside advisors and establish the terms of such engagement, including compensatory fees. The Compensation Committee determined to re-engage Mercer (US) Inc. (“Mercer”) as its compensation consultant for 2010 with respect to executive compensation and Trustee compensation programs generally. The Compensation Committee works with management to determine Mercer’s responsibilities and direct its work product, but the Compensation Committee is responsible for the formal approval of the annual work plan.

 

With respect to the 2010 executive compensation program, the Compensation Committee engaged Mercer to discuss best-practices and market trends in executive compensation, provide a detailed analysis of the long-term incentive program and benchmark certain compensation. See “Compensation Discussion and Analysis — Process for Making Compensation Determinations” and “Compensation Discussion and Analysis — 2010 Compensation Determinations — Long-Term Incentive Compensation.”

 

In addition to the foregoing, the Trust engaged FPL Associates Compensation (“FPL”) to assist Mr. Gershenson in providing his recommendations to the Compensation Committee with respect to the named executive officers other than Messrs. Gershenson and Andrews. Mr. Gershenson directs FPL’s work product, which for the 2010 compensation program consisted of an assessment of the Trust’s competitive positioning regarding the compensation of the named executive officers other than Messrs. Gershenson and Andrews. The Compensation

Committee is provided with the FPL market data when assessing Mr. Gershenson’s compensation recommendations for the applicable named executive officers.

 

With respect to the 2010 non-employee Trustee compensation program, the Compensation Committee engaged Mercer to provide a detailed analysis of the non-employee Trustee program. See “Board Matters — Trustee Compensation.”

 

Nominating and Governance Committee

 

The Nominating and Governance Committee is responsible for identifying and nominating individuals qualified to serve as Board members, recommending Trustees for each Board committee and overseeing the Trust’s Corporate Governance Guidelines and related corporate governance issues. The Nominating and Governance Committee also is responsible for the Trust’s Code of Business Conduct and Ethics and considers any requests for waivers from such code. See the Nominating and Governance Committee’s charter for additional information on its responsibilities and activities.

 

The Nominating and Governance Committee considers the experience, mix of skills and other qualities of the existing Board to ensure appropriate Board composition. The Nominating and Governance Committee does not have a specific diversity policy underlying its nomination process, although it seeks to ensure the Board includes members with diverse backgrounds, qualifications, skills and experience, including appropriate financial, governance, capital market, real estate and other expertise relevant to the Trust’s business. Generally, the Nominating and Governance Committee will re-nominate incumbent Trustees who continue to satisfy its criteria for members of the Board, who it believes will continue to make important contributions to the Board and who consent to continue their service on the Board. If a vacancy on the Board occurs, the Nominating and Governance Committee will review the experience, mix of skills and background, independence and other qualities of a nominee to ensure appropriate Board composition after taking into account the current Board members and the specific needs of the Trust and Board.

 

The Nominating and Governance Committee generally relies on multiple sources for identifying and evaluating nominees, including referrals from the Board and the Trust’s management. The Nominating and Governance Committee did not engage a search firm or pay fees to other third parties in connection with identifying or evaluating Board nominees set forth in this proxy statement. The Nominating and Governance Committee does not solicit Trustee nominations, but will consider nominee recommendations by shareholders with respect to elections to be held at an annual meeting, so long as such recommendations are timely made and otherwise in accordance with the Trust’s Bylaws and applicable law. Such recommendations will be evaluated against the same criteria used to evaluate other nominees. The Trust did not receive any nominations of Trustees by shareholders for the 2011 annual meeting of shareholders.

 

Under the Bylaws, shareholders must follow an advance notice procedure to nominate candidates for election as Trustees or to bring other business before an annual meeting. The advanced notice procedures set forth in the Bylaws do not affect the right of shareholders to request the inclusion of proposals in the Trust’s proxy statement and form of proxy pursuant to SEC rules. See “Additional Information — Presentation of Shareholder Proposals and Nominations at 2012 Annual Meeting” for information regarding providing timely notice of shareholder proposals and nominations.

 

Executive Committee

 

The Executive Committee is permitted to exercise all of the powers and authority of the Board, except as limited by applicable law and the Bylaws. The Executive Committee generally acts pursuant to unanimous written consents.

 

 

The Board and management are committed to responsible corporate governance to ensure that the Trust is managed for the benefit of its shareholders. To that end, the Board and management periodically review and update

the Trust’s corporate governance policies and practices as appropriate or required by applicable law, the NYSE listing standards or SEC regulations.

 

As noted above, the Board approved the declassification of the Board in June 2010 following shareholder approval of the Board’s related proposal. Beginning with the 2011 annual meeting, the successors to the Trustees whose term expires at such meeting will be elected for a one-year term. Therefore, the Board will be fully declassified beginning with the 2013 annual meeting.

 

The Trust has adopted a Code of Business Conduct and Ethics which sets forth basic principles to guide the conduct of Trustees and the Trust’s employees, including its principal executive officer, principal financial officer, principal accounting officer or controller and persons serving similar functions. The code covers numerous topics including illegal or unethical behavior, conflicts of interest, compliance with laws, corporate opportunities and confidentiality. A copy of the Trust’s Code of Business Conduct and Ethics is available on the Trust’s website under “Investor Info — Corporate Overview — Governance Documents” at www.rgpt.com. Any waiver or material amendment that relates to the Trustees or certain executive officers of the Trust will be publicly disclosed in such subsection on the Trust’s website within four business days of such action. See “Related Person Transactions” for additional information regarding policies and procedures specifically addressing related person transactions.

 

The Trust has also adopted Corporate Governance Guidelines, which address, among other things, a Trustee’s responsibilities, qualifications (including independence), compensation and access to management and advisors. The Nominating and Governance Committee is responsible for overseeing and reviewing these guidelines and recommending any changes to the Board. A copy of the Trust’s Corporate Governance Guidelines is available on the Trust’s website under “Investor Info — Corporate Overview — Governance Documents” at www.rgpt.com.

 

A copy of the Trust’s committee charters, Code of Business Conduct and Ethics and Corporate Governance Guidelines will be sent to any shareholder, without charge, upon written request sent to the Trust’s executive offices: Investor Relations, Ramco-Gershenson Properties Trust, 31500 Northwestern Highway, Suite 300, Farmington Hills, Michigan 48334.

 

 

The Compensation Committee and Board believe that Trustees should receive a mix of cash and equity. Compensation paid to the non-employee Trustees is intended to provide incentives to such persons to continue to serve on the Board, to further align the interests of the Board and shareholders and to attract new Trustees with outstanding qualifications. Trustees who are employees or officers of the Trust or any of its subsidiaries do not receive any compensation for serving on the Board or any committees thereof; therefore, Mr. Gershenson is excluded from the Trustee compensation table below.

 

The Compensation Committee engaged Mercer to assess the Trust’s competitive position regarding its non-employee Trustee compensation program in 2010. The market data (based on 2009 and 2010 compensation data) indicated that the Trustees were under-compensated relative to a 10-company peer group, taking into account the Trust’s relative size and market capitalization among the peer group. The peer group consisted of the same companies utilized by Mercer in connection with the 2010 long-term incentive program analysis, except Kimco Realty Corporation and Developers Diversified Realty Corporation were excluded from the non-employee Trustee peer group to prevent distortion of compensation levels given their significantly larger size than the other peer companies and the Trust. See “Compensation Discussion and Analysis — 2010 Compensation Determinations — Long-Term Incentive Compensation” for the peer group listing. The Committee also desired to simplify the compensation program. Based on the foregoing analysis, the Compensation Committee recommended, and the Board approved, the revisions noted below, effective July 1, 2010.

2010 Non-Employee Trustee Compensation

 

The following table sets forth the compensation program for non-employee Trustees in 2010:

 

 

 

 

The Trust also reimburses all Trustees for all expenses incurred in connection with attending any meetings or performing their duties as Trustees.

 

Stock Ownership Guidelines. Effective September 2008, the Compensation Committee approved stock ownership guidelines for the Trustees. The guidelines require such persons to hold a number of Shares having a market value equal to three times the then current annual stock grant denominated in Shares for all Trustees. Trustees have a five-year period to comply with the guidelines, with the initial compliance deadline being September 2013. The Compensation Committee will review the minimum equity holding level and other market trends and practices on a periodic basis. The Compensation Committee has confirmed that all Trustees currently satisfy the guidelines or are making significant progress toward the guidelines.

 

Deferred Fee Plan. In 2008, the Board approved the Ramco-Gershenson Properties Trust Deferred Fee Plan for Trustees. A Trustee may elect to defer fees earned for services provided during a subsequent calendar year (“Deferral Year”) by completing and filing a proper deferred fee agreement with the Secretary of the Trust no later than December 31 of the year prior to the Deferral Year. A Trustee may elect to credit any cash fees to a stock account or a cash account. Stock fees deferred can only be credited to the stock account. Shares in the stock account will receive distributions, which at the Trustee’s election will either be paid in cash or will be reinvested in Shares. Cash in the cash account will accrue interest at JP Morgan Chase’s prime rate. A Trustee may modify or revoke his or her existing fee deferral election only on a prospective basis, only for fees to be earned in a subsequent calendar year, and only if the Trustee executes a new deferred fee agreement or revokes his or her existing deferred fee agreement in writing by December 31 of the year preceding the calendar year for which such modification or revocation is to be effective. The Trustee must elect the end of the deferral period at the time of such election and, except for limited circumstances, no Trustee shall have any right to make any early withdrawals from the Trustee’s deferred fee accounts.

2010 Trustee Compensation Table

 

 

 

 

 

 

 

Any shareholder or interested party who desires to communicate with the Board or any specific Trustee(s) can write to the Board at the following address: Board of Trustees, c/o Secretary, Ramco-Gershenson Properties Trust, 31500 Northwestern Highway, Suite 300, Farmington Hills, Michigan 48334. All communications received by the Trust’s Secretary which are addressed to the Board or a Committee will be forwarded directly to the members of the Board.

 

Shareholders, Trust employees, officers, Trustees or any other interested persons who have concerns or complaints regarding accounting or auditing matters of the Trust are encouraged to contact, anonymously or otherwise, the Chairman of the Audit Committee (or any Trustee who is a member of the Audit Committee) at the address above. Such admissions will be treated confidentially.

 

The executive officers of the Trust serve at the pleasure of the Board. The executive officers of the Trust are as follows:

 

 

See “Proposal 1 — Election of Trustees” for biographical and other information regarding Mr. Gershenson.

 

Gregory R. Andrews has been Chief Financial Officer and Secretary since March 2010. Previously, Mr. Andrews served as Executive Vice President of Finance of the Trust from February to March 2010. Mr. Andrews has over 20 years of real estate experience, including executive management positions with Equity One, Inc., another publicly traded REIT, from November 2006 to April 2009 (including as Executive Vice President and Chief Financial Officer) and Green Street Advisors, Inc., an investment advisory firm, from March 1997 to November 2006. Mr. Andrews was also previously a vice president in the commercial real estate group at Bank of America. Mr. Andrews currently is a director of Orange 21 Inc. (and serves on the Audit Committee).

 

Catherine J. Clark has been Senior Vice President — Acquisitions since June 2005. Ms. Clark has been employed with the Trust since 1997 in various acquisition roles. Previously, Ms. Clark was a Vice President with Farmington Mortgage, a subsidiary of the Fourmidable Group, and Vice President with Amurcon Corporation. Ms. Clark has over 25 years of experience in the real estate industry.

 

Thomas W. Litzler was Executive Vice President — Development and New Business Initiatives from February 2006 to April 2011. Mr. Litzler was Senior Vice President, Asset Manager for New Plan Excel Realty Trusts’ Midwest Region from 2003 to 2006, and was Vice President of Development for A&P’s Midwest region from 1994 to 2002. Mr. Litzler is a member of the Michigan Committee for the International Council of Shopping Centers.

 

Michael J. Sullivan has been Senior Vice President — Asset Management since August 2005. Previously, Mr. Sullivan was Senior Vice President of Operations for Restaurant Associates’ Sports & Entertainment division, a subsidiary of Compass Group PLC. Mr. Sullivan holds a baccalaureate in International Relations from St. Joseph’s University in Pennsylvania. His professional affiliations include the International Council of Shopping Centers and National Association of Concessionaires.

 

Frederick A. Zantello has been an Executive Vice President since June 2005. Mr. Zantello has been employed with the Trust since April 1997, including serving as Executive Vice President of Development and Senior Vice President and Executive Vice President of Asset Management, respectively. Previously, Mr. Zantello was the Executive Vice President, Chief Operating Officer with Glimcher Realty Trust and Director of Real Estate with Federated Department Stores. Mr. Zantello is a member of the International Council of Shopping Centers and has over 30 years of experience in the real estate industry.

 

The Compensation Committee of the Board (referred to as the “Committee” in this section and the Named Executive Officer Compensation Tables), composed entirely of independent Trustees, administers the executive compensation program of the Trust. The Committee’s responsibilities include recommending and overseeing compensation and benefit plans and policies, reviewing and approving equity grants and otherwise administering share-based compensation plans, and reviewing and approving annually all compensation decisions relating to the Trust’s executive officers, including the Chief Executive Officer, the Chief Financial Officer and the other executive officers named in the Summary Compensation Table (the “named executive officers”). This section of the proxy statement explains how the Trust’s compensation programs are designed and operated in practice with respect to the named executive officers.

 

James H. Smith served as Interim Chief Financial Officer until March 2010. As consideration, the Trust paid CFO Synergy, Inc., a consulting company for which Mr. Smith serves as President, $275 per hour and reimbursed it for specified expenses. All references in this CD&A exclude the foregoing compensation arrangement for Mr. Smith.

 

Gregory R. Andrews was appointed Executive Vice President of Finance in February 2010 and became Chief Financial Officer and Secretary in March 2010, replacing Mr. Smith.

 

Executive Summary

 

Overview of Compensation Program

 

The following is a summary of key aspects of our 2010 compensation program for named executive officers:

 

 

 

Overview of 2010 Compensation Actions

 

In determining compensation for named executive officers in 2010, the Committee generally focused on establishing a base salary, a target annual cash bonus and a target long-term incentive award (collectively, “Target Compensation”). In 2010, the Committee again was challenged to balance the need to attract, motivate and retain the named executive officers, implement the initiatives arising out of the Board’s 2009 review of financial and strategic alternatives and the resulting re-confirmation of its stand-alone business strategy, remain fiscally conservative and limit cash and non-cash compensation expense, and ensure alignment with shareholders.

 

In March 2010, the Committee determined that it was prudent to increase base salaries by 3.5% for each named executive officer, except Mr. Andrews whose employment terms were negotiated upon his hire in February 2010. Such base salary increase resulted in a 3.5% increase in the cash value of their target annual bonuses, which is based on a percentage of base salary. Historically, all annual bonuses had been discretionary. However, in March 2010, the Committee approved the adoption of the 2010 Executive Incentive Plan for the Trust’s Chief Executive Officer and Chief Financial Officer, which consisted of three performance components described below.

 

In 2010, the Committee also re-implemented the Trust’s long-term incentive compensation program, with approved long-term incentive targets of 75% to 120% of the base salary for the named executive officers, which generally is consistent with the historical long-term incentive program. The 2010 base salary increase was not included in the base salary utilized for the 2010 long-term incentive target awards. In 2010, the Committee determined that service-based restricted stock grants and performance-based restricted stock grants each would correspond to 50% of the long-term incentive dollar target.

The following table sets forth the Target Compensation for the named executive officers in 2010.

 

 

 

 

Overview of 2010 Operating Performance and Pay-For-Performance

 

Target Performance Metrics. The global economic and financial market downturn in 2008 and 2009 caused, among other things, a significant tightening in the credit markets, lower levels of liquidity, increased rates of default and bankruptcy, lower consumer and business spending, and lower consumer confidence and net worth, all of which had a negative effect on the Trust’s business, results of operations, financial condition and liquidity. As of the time the Committee deliberated regarding the 2010 compensation program for the named executive officers in late 2009 and early 2010, forecasts for 2010 generally projected a continuing weak economy in the United States, with a long, slow recovery from the severe economic recession. Although management was unable to predict the duration and depth of the economic slowdown and the precise impact on the Trust’s business at such time, management noted that the timing and nature of any recovery in the general economy, credit and financial markets, and the REIT industry remained uncertain. Management also noted that a continued weak economy would strain the resources of the Trust’s tenants and their customers, as well as the Trust’s joint venture partners and vendors, and negatively impact the Trust’s ongoing business and future operations. Such conditions made it very difficult to forecast operating results, make business decisions and address material business risks.

 

Another significant impact on 2010 resulted from the Trust’s completion of its review of financial and strategic alternatives in the third quarter of 2009 and its re-confirmation of a stand-alone business strategy. The resulting strategy included an initiative to de-leverage the balance sheet and strengthen the Trust’s financial position by utilizing a variety of measures, including reducing debt through the sale of non-core assets, growth in shopping center operating income and other actions, where appropriate. This initiative materially impacted the Trust’s expectations of financial performance in 2010.

 

The 2010 annual bonus plan for Mr. Gershenson and Mr. Andrews included performance-based financial measures for FFO per share and the debt-to EBITDA ratio, as well as individual performance goals. For the FFO per share component of the 2010 annual bonus plan, the achievement of $1.18 per share, $1.22 per share, and $1.32 per share and above corresponded to payouts of 50%, 100% and 200%, respectively, of the target component. FFO per share in 2009 was $1.80 and, as of March 2010 when the performance target was established, the Trust’s guidance for 2010 was $1.12 to $1.24. The significantly lower guidance was due primarily to the Trust’s plan to significantly deleverage in 2010, as well as increased costs from a new secured revolving credit facility, the full-year impact of NOI reduction from three asset sales in 2009, and lower minimum rent due to tenant bankruptcies and concessions granted in 2009. For the debt-to-EBITDA ratio component of the 2010 annual bonus plan, the achievement of 7.3x, 7.1x and 6.7x corresponded to payouts of 50%, 100% and 200%, respectively, of the target component. The debt-to-EBITDA ratio in 2009 was 7.7x and, as of March 2010 when the performance measure was established, the

Trust’s guidance for 2010 was between 7.0x to 7.2x. For both components, there was a linear increase in payout between the performance levels.

 

In addition, 50% of the 2010 long-term incentive award was allocated to performance-based restricted stock, which can be earned based on the Trust’s relative total shareholder return over a three-year period compared to a 12-company peer group. The achievement of the 50^th percentile, 75^th percentile and 90^th percentile and above corresponds to payouts of 100%, 150% and 200%, respectively, of the target incentive. There is a linear increase in payout between the performance levels.

 

2010 Results and Earned Compensation. The named executive officers earn the Target Compensation only to the extent target performance measures are achieved. To the extent target performance measures are not achieved or are exceeded, the named executive officers generally will earn compensation below or above the Target Compensation, respectively.

 

Mr. Gershenson and Mr. Andrews earned approximately 68% of their respective target annual bonus in 2010. Mr. Gershenson voluntarily reduced his bonus earned in 2010 by approximately $75,000, or 23%, in recognition of economic conditions and similar reductions imposed on other members of senior management. Mr. Litzler, Mr. Zantello and Mr. Sullivan earned approximately 49%, 85% and 145%, respectively, of their target annual bonus in 2010.

 

From the beginning of the performance period in January 2010 through December 31, 2010, the Trust’s total shareholder return was 38.4% (71^st percentile of the peer group) and such performance would have resulted in a 143% payout of the target performance-based restricted stock awards. The actual payout determination will be made for the three-year period ended December 31, 2012.

 

Notwithstanding the foregoing, the Committee retains the discretion to revise performance-based compensation for individual performance or extraordinary circumstances. The Committee also retains discretion to provide bonuses outside the Trust’s annual bonus plan, make equity grants other than under the existing long-term incentive program, and to provide other compensation. In 2010, the Committee granted discretionary equity awards to Mr. Gershenson and Mr. Zantello. See “2010 Compensation Determinations — Long-Term Incentive Compensation.”

 

Compensation Philosophy, Program Objectives and Key Features

 

The Trust’s compensation program for named executive officers is designed to:

 

 

In furtherance of the foregoing, the Trust’s compensation program for named executive officers historically has consisted of a base salary, an annual bonus, long-term incentive compensation and certain other benefits. The Trust also provides certain deferred compensation and severance arrangements.

 

The Committee recognizes that a compensation program must be flexible to address all of its objectives. The Committee historically has used market data as a compensation guideline, and the Committee also considers Trust performance, individual performance reviews, hiring and retention needs and other market factors in finalizing its compensation determinations. The Committee customarily takes significant direction from the recommendations of Mr. Gershenson and market data from third party consultants to determine the amount and form of compensation utilized in the executive compensation program. See “Process for Making Compensation Determinations — Advisors Utilized in Compensation Determinations” below.

The following table sets forth how each element of compensation in the 2010 executive compensation program is intended to satisfy one or more of the Trust’s compensation objectives, as well as key features of the compensation elements that address such objectives.

 

Process for Making Compensation Determinations

 

Advisors Utilized in Compensation Determinations

 

Management and Other Employees. The Committee takes significant direction from the recommendations of Mr. Gershenson regarding the design and implementation of the executive compensation program because he has significant involvement in and knowledge of the Trust’s business goals, strategies and performance, the overall effectiveness of the executive officers and each person’s individual contribution to the Trust’s performance. For each named executive officer, the Committee is provided a compensation recommendation as well as information regarding historical earned compensation, the individual’s experience, current performance, potential for advancement and other subjective factors. Mr. Gershenson also provides recommendations for the performance metrics to be utilized in the incentive compensation programs, the appropriate performance targets and an analysis of whether such performance targets have been achieved (including recommended adjustments). The Committee retains the discretion to modify the recommendations of Mr. Gershenson and reviews such recommendations for their reasonableness based on the Trust’s compensation philosophy and related considerations.

 

Generally, the Committee sets the meeting dates and agendas for Committee meetings and Mr. Gershenson is invited to attend many of such meetings. The Committee also meets regularly in executive session outside the presence of management to discuss compensation issues generally, as well as to review the performance of and determine the compensation of Mr. Gershenson. The Trust’s legal advisors, human resources department and corporate accounting department support the Committee in its work in developing and administering the compensation plans and programs.

 

Third-Party Consultants. With respect to the 2010 executive compensation program, the Compensation Committee engaged Mercer to discuss best-practices and market trends in executive compensation and provide a detailed analysis of the long-term incentive program. In addition, the Committee and Mr. Gershenson historically have used market data as an important guideline in establishing target compensation, with the objective of having various compensation elements at or slightly above the market median. See “— Compensation Differences Among Named Executive Officers” below for information regarding benchmarking in 2010.

 

In addition to the foregoing, the Trust engaged FPL to provide market data for the other named executive officers to assist Mr. Gershenson in providing his recommendations to the Committee. The Committee did not benchmark the compensation of the other named executive officers.

 

Compensation Differences Among Named Executive Officers

 

The Committee utilized benchmarking by job responsibilities and position in establishing certain compensation levels in 2010. Mr. Gershenson, President and Chief Executive Officer, leads the management of the Trust across all departments as well as serving as management’s representative on the Board. With respect to Mr. Gershenson, the Committee concluded that Mr. Gershenson’s Target Compensation was significantly below the median of the peer group. The Committee determined to make up for such shortfall by granting 15,000 shares of service-based restricted stock and 15,000 shares of performance-based restricted stock and making such awards subject to the same terms of other long-term incentive grants. Mr. Andrews, Chief Financial Officer and Secretary, is primarily responsible for financial and financial reporting matters of the Trust and also shares significant responsibilities and leadership with Mr. Gershenson in his core areas of responsibility as well as the Trust as a whole. With respect to Mr. Andrews, the Committee utilized benchmarking as one of many important factors in negotiating the terms of Mr. Andrews’ employment agreement in connection with his hiring in February 2010. For both persons, the Committee utilized the same peer group reviewed for purposes of the long-term incentive grants. See “2010 Compensation Determinations — Long-Term Incentive Compensation” for the list of 12 peer companies.

 

Benchmarking by job responsibilities and position has been a significant factor in the Trust’s compensation program for the other named executive officers in prior years, but it was not a direct factor in the determining 2010 Target Compensation. The compensation of the other named executive officers was last benchmarked in 2008,

which continues to impact the current compensation program. The other named executive officers are responsible for key operating divisions of the Trust.

 

The Committee also utilized internal pay equity as an additional data point, but the Committee does not target specific internal pay equity metrics.

 

2010 Compensation Determinations

 

Base Salary

 

The base salaries of named executive officers are reviewed on an annual basis, as well as at the time of a promotion or other change in responsibilities. Annual merit increases are generally effective January of the applicable year.

 

Historically, the Committee relies primarily on peer group analyses in determining annual salary increases while also considering the Trust’s overall performance, and the individual’s experience, current performance and potential for advancement. The Committee determined to increase base salaries by 3.5% for the named executive officers for 2010, which was based on general survey data and impacted by the freeze or reduction of base salaries for such persons in 2009. Mr. Andrews’ base salary reflects his base salary set forth in his employment agreement entered into in February 2010.

 

The following table sets forth the base salaries approved for the named executive officers in 2009 and 2010.

 

 

Annual Bonus — Dennis Gershenson and Gregory Andrews

 

Target Bonus. The Chief Executive Officer and Chief Financial Officer of the Trust have historically received discretionary bonuses, which have been primarily based upon the peer group analyses and a review of the Trust’s overall performance. In 2009, Mr. Gershenson agreed to waive his guaranteed minimum annual bonus of $350,000 for the remainder of the term of his employment agreement. On March 1, 2010, the Committee approved the adoption of the 2010 Executive Incentive Plan for the Trust’s Chief Executive Officer and Chief Financial Officer. The performance objectives for 2010 include funds from operations per share (40%), balance sheet improvement (debt-to-EBITDA ratio) (30%), and individual strategic goals (30%). The target bonus for the Chief Executive Officer and the Chief Financial Officer is 100% and 60% of base salary, respectively. Therefore, Mr. Gershenson’s base salary increase of 3.5% in 2010 resulted in the same increase in his target annual bonus. Each of the components is analyzed independently, with payouts for each component ranging from 50% to 200% of the target incentive multiplied by the component weighting for each component.

 

Earned Bonus. Set forth below are the target annual bonuses in 2010 and the earned annual bonuses in 2009 and 2010. Mr. Gershenson and Mr. Andrews earned in aggregate 67.5% of their respective target annual bonus in 2010. Mr. Gershenson voluntarily reduced his bonus earned in 2010 by approximately $75,000, or 23%, in recognition of economic conditions and similar reductions imposed on other members of senior management. Although Mr. Andrews was employed as the Chief Financial Officer for approximately 10 months in 2010, the Committee determined to pay him the full bonus amount instead of a pro rata portion in light of his individual performance in his initial year of employment.

 

 

The following table sets forth the financial performance measures for certain payouts, together with actual results, regarding the 2010 annual bonus plan for Messrs. Gershenson and Andrews.

 

 

 

(1) NAREIT defines Funds From Operations (FFO) as net income attributable to common shareholders, excluding extraordinary items (as defined under GAAP) and gains (losses) on sales of depreciable property, plus real estate related depreciation and amortization (excluding amortization of financing costs), and after adjustments for unconsolidated partnerships and joint ventures. FFO should not be considered as an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity. FFO is used as an additional indicator of our operating performance.

 

(2) Actual FFO per share for 2010 was $1.045 per share without adjustment. For purposes of the performance measure, the Committee made an upward adjustment to actual FFO per share of $0.167 per share for an accounting change implemented in 2010 that was not budgeted relating to the expense of certain development costs that were previously capitalized.

 

(3) EBITDA is defined as earnings before interest, income taxes, and depreciation and amortization of our consolidated and unconsolidated businesses. EBITDA should not be considered as an alternative to net income (computed in accordance with GAAP) or as an alternative to cash flow as a measure of liquidity. EBITDA is used as an additional indicator of our operating performance. The Committee made no adjustments to actual Debt to EBITDA in 2010.

 

The following list sets forth the target individual strategic performance measures regarding the annual bonus plan for Messrs. Gershenson and Andrews. The Committee reviewed the individual performance measures in aggregate and determined that Mr. Gershenson and Mr. Andrews each performed at the target level in 2010, which corresponded to a 100% payout out of a maximum 200% payout for this component.

 

Dennis Gershenson

 

 

Gregory Andrews

 

 

 

Annual Bonus — Other Named Executive Officers

 

Target Bonus. The target bonus for the other named executive officers is discretionary and is calculated based on a percentage of such person’s base salary. Although the Committee generally believes that target bonuses of 40% of base salary are appropriate for the other named executive officers, the Committee reduced the target bonuses in 2009 and 2010 in light of economic conditions and related conservative budgeting. For 2010, the base salary increase of 3.5% resulted in the same increase in the cash value of their respective target annual bonus.

 

The annual cash bonus payouts are based upon the Committee’s subjective review of a variety of corporate, department and individual factors, along with the Committee’s view of the market and of the Trust’s need to retain its key executives.

 

Earned Bonus. Set forth below are the target annual bonuses and the earned annual bonuses in 2009 and 2010.

 

 

Mr. Litzler, Mr. Zantello and Mr. Sullivan earned approximately 49%, 85% and 145%, respectively, of their 2010 target bonus. Mr. Sullivan’s bonus was a higher percentage of his target bonus generally due to the relative performance of the asset management department and his strong individual performance in 2010. Mr. Litzler’s bonus reflected the lack of development activities of the Trust primarily due to current market dynamics. Mr. Zantello’s bonus falls in the middle of the other two named executive officers, which results from his responsibilities in both the asset management and development departments.

 

Long-Term Incentive Compensation

 

In 2010, the Committee re-implemented the Trust’s long-term incentive compensation program, with approved long-term incentive targets of 75% to 120% of base salary for the named executive officers, which generally is consistent with the historical long-term incentive program. The long-term incentive program consists of service-based restricted stock and performance-based restricted stock. In 2010, the Committee determined that service-based restricted stock grants and performance-based restricted stock grants each would correspond to 50% of the long-term incentive dollar target. The service-based restricted stock vests in five equal installments on anniversary of grant date.

 

The performance-based restricted stock is earned based on the achievement of specific performance measures over a period of three calendar years (with such measures established by the Committee at the beginning of the three-year period). For 2010 awards, the sole performance measure is relative total shareholder return over a three-year period. The Committee revised the applicable performance goal from FFO per diluted share, which was utilized for grants made in 2008, to relative total shareholder return based on the Committee’s current view that a relative performance measure was more meaningful to long-term investors. Such performance measure was also the most common performance metric used by the applicable peer group. The twelve peer companies for 2010 are publicly traded shopping center REITs, which were selected based on the Committee’s view that such REITs were the Trust’s primary competitors for shareholder investment: Kimco Realty Corporation, Developers Diversified Realty Corporation, Weingarten Realty Investors, Regency Centers Corporation, Federal Realty Investment Trust, Equity One, Inc., Cedar Shopping Centers, Inc., Acadia Realty Trust, Inland Real Estate Corporation, Kite Realty Group Trust, Saul Centers, Inc., and Urstadt Biddle Properties. The achievement of 50^th percentile, 75^th percentile

and 90^th percentile and above corresponds to payouts of 100%, 150% and 200%, respectively, of the target incentive. There is a linear increase in payout between the performance levels.

 

The LTIP grants for the 2010 compensation program were as follows:

 

 

From the beginning of the performance period in January 2010 through December 31, 2010, the Trust’s total shareholder return was 38.4% (71^st percentile of the peer group) and such performance would have resulted in a 143% payout of the target performance-based restricted stock awards. The actual payout determination will be made for the three-year period ended December 31, 2012.

 

Discretionary Equity Grants. Mr. Gershenson also received an additional 15,000 shares of performance-based restricted stock (with the same terms as noted above) and 15,000 shares of service-based restricted stock due to benchmarking. Mr. Zantello also received an additional 3,500 shares of service-based restricted stock due to a rebalancing of his compensation structure beginning in 2009, which included a lower base salary and additional service-based restricted stock.

 

Prior Long-Term Compensation Awards. Under the prior long-term incentive program, the performance-based restricted stock grants made in 2008, with a 2008 to 2010 performance period, were not earned. There were no long-term compensation awards made in 2009.

 

Equity Compensation — Other Policies

 

Stock Ownership Guidelines. Effective September 2008, the Committee approved stock ownership guidelines for the executive officers. The guidelines require such persons to hold a number of Shares having a market value equal to a multiple of their then current base salary; Mr. Gershenson’s multiple is five and all other executive officers’ multiple is three. Covered employees have a five-year period to comply with the guidelines, with the initial compliance deadline being September 2013. The Committee will review the minimum equity holding level and other market trends and practices on a periodic basis. The Committee has confirmed that all employees currently satisfy the guidelines or are making significant progress toward the guidelines.

 

Timing and Pricing of Share-Based Grants. The Trust does not coordinate the timing of share-based grants with the release of material non-public information. Annual option or restricted stock grants for executive officers and other employees are generally made at the first Committee meeting each year with a grant date as of such approval or shortly thereafter. Further, restricted stock awards that are subject to performance measures are generally granted at the first Committee meeting of the year following satisfaction of such performance measures. The Committee generally establishes dates for regularly scheduled meetings at least a year in advance.

 

In accordance with the Trust’s compensation plans, the exercise price of each option is the closing price of the Shares (as reported by the NYSE) on the grant date (which date is not earlier than the date the Committee approved such grant). The Committee is prohibited from repricing options, both directly (by lowering the exercise price) and indirectly (by canceling an outstanding option and granting a replacement option with a lower exercise price), without shareholder approval, except in limited circumstances such as a stock split, stock dividend, special dividend or distribution or similar transactions.

Trading Limitations. In addition to the restrictions set forth in SEC regulations, the Trust has an insider trading policy, which among other things, prohibits Trustees, executive officers and other employees from engaging in short sales, trading in options or participating in any other speculative investments relating to the Trust’s stock.

 

Perquisites and Other Personal Benefits

 

The Trust historically provides named executive officers with perquisites and other personal benefits that the Committee believes are reasonable and consistent with its overall compensation program to enable the Trust to attract and retain employees for key positions. See the Summary Compensation Table for a description of certain perquisites provided to named executive officers in 2010.

 

Deferred Stock

 

The Committee believes nonqualified deferred compensation arrangements are a useful tool to assist in tax planning and ensure retirement income for its named executive officers. Existing deferred compensation arrangements do not provide for above-market or preferential earnings as defined under SEC regulations.

 

Under the Ramco-Gershenson Properties Trust Deferred Compensation Plan for Officers, an officer can elect to defer restricted shares which may be granted during a subsequent calendar year. No executive officers elected to defer their restricted share grants in 2010.

 

Mr. Zantello is party to a deferral agreement with the Trust whereby he irrevocably committed to defer the gain on the exercise of specified options. See “Named Executive Officer Compensation Tables — Nonqualified Deferred Compensation in 2010” for additional information.

 

Contingent Compensation

 

The Trust has a Change of Control Policy applicable to the Chief Executive Officer, Chief Financial Officer, executive vice president or any senior vice president, which includes all executive officers. The policy provides for payments of specified amounts if such person’s employment with the Trust or any subsidiary is terminated in specified circumstances following a change of control, but does not include a tax gross-up. The policy was amended in March 2010 to revise the amounts payable thereunder, which now equals the product of (x) for the Chief Executive Officer, 2.99, and for the Chief Financial Officer, an executive vice president or a senior vice president, 2.0, and (y) the base amount under Section 280G of the Internal Revenue Code of 1986, as amended (“IRC”). The March 2010 amendment also revised the definition of a change of control to eliminate the trigger caused by the election or appointment to the Board of any Trustee whose appointment or election to the Board or nomination for election by the Trust’s shareholders was not approved by a vote of at least a majority of specified Trustees.

 

The Trust believes this policy would be instrumental in the success of the Trust in the event of any future hostile takeover bid and would ensure the continued dedication of employees, notwithstanding the possibility, threat or occurrence of a change of control. Further, it is imperative to diminish the inevitable distraction of such employees by virtue of the personal uncertainties and risks created by a pending or threatened change of control, and to provide such employees with compensation and benefits upon a change of control that ensure that such employees’ compensation and benefits expectations are satisfied. Finally, many competitors have change of control arrangements with named executive officers and such policy ensures the Trust will be competitive in its compensation program. See “Named Executive Officer Compensation Tables — Potential Payments Upon Termination or Change-in-Control” for further information.

 

The Trust has employment agreements with Mr. Gershenson and Mr. Andrews which provide for specified severance benefits, including termination upon a change of control. Mr. Gershenson’s agreement includes a full tax gross-up regarding change of control payments, which reinforces the purpose of the change of control benefit.

 

Policy Regarding Retroactive Adjustment

 

Section 304 of the Sarbanes-Oxley Act of 2002 requires a company to claw back certain incentive-based compensation and stock profits of the Chief Executive Officer and Chief Financial Officer if the company is

required to prepare an accounting restatement due to the material noncompliance of the company, as a result of misconduct, with any financial reporting requirement under the securities laws. The Committee does not otherwise have a formal policy regarding whether the Committee will make retroactive adjustments to, or attempt to recover, cash or share-based incentive compensation granted or paid to senior management in which the payment was predicated upon the achievement of certain financial results that are subsequently the subject of a restatement. The Committee intends to adopt an appropriate recoupment policy following the approval of applicable regulations required by the Dodd-Frank Act.

 

Tax and Accounting Considerations

 

Deductibility of Executive Compensation

 

The Committee has reviewed the Trust’s compensation policies in light of Section 162(m) of the IRC, which generally limits deductions by a publicly-held corporation for compensation paid to certain executive officers to $1,000,000 per annum, subject to specified exceptions (the most significant of which is performance-based compensation), and has determined that the compensation levels of the Trust’s executive officers were not at a level that would be materially affected by such provisions. Even if the Trust’s compensation expense deduction were limited by Section 162(m), as long as the Trust continues to qualify as a real estate investment trust under the IRC, the payment of non-deductible compensation should not have a material adverse impact on the Trust. The Committee intends to continue to review the application of Section 162(m) with respect to any future compensation arrangements considered by the Trust.

 

Nonqualified Deferred Compensation

 

Section 409A of the IRC provides that amounts deferred under nonqualified deferred compensation arrangements will be included in an employee’s income when vested unless certain conditions are met. If the certain conditions are not satisfied, amounts subject to such arrangements will be immediately taxable and employees will be subject to additional income tax, penalties and a further additional income tax calculated as interest on income taxes deferred under the arrangement. In December 2008, the Trust revised certain of its compensation agreements to ensure that the Trust’s employment, severance and deferred compensation arrangements satisfy the requirements of Section 409A to allow for deferral without accelerated taxation, penalties or interest.

 

Change of Control Payments

 

Section 280G of the IRC disallows a company’s tax deduction for “excess parachute payments,” generally defined as payments to specified persons that are contingent upon a change of control in an amount equal to or greater than three times the person’s base amount (the five-year average of Form W-2 compensation). Additionally, IRC Section 4999 imposes a 20% excise tax on any person who receives such excess parachute payments.

 

The Trust’s share-based plans entitle participants to payments in connection with a change of control that may result in excess parachute payments. Further, Mr. Gershenson’s and Mr. Andrews’ employment agreements, along with the Change of Control Policy for the benefit of executive officers, entitle such persons to payments upon termination of their employment following a change of control that may qualify as excess parachute payments. As noted earlier, Mr. Gershenson’s employment agreement provides for a full tax-gross up on benefits that exceed limits set forth in Section 280G of the IRC.

 

The Compensation Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis (CD&A) in this proxy statement with management, including the Chief Executive Officer. Based on such review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in the Trust’s annual report on Form 10-K for the year ended December 31, 2010 and the proxy statement for the 2011 annual meeting of shareholders.

 

The Compensation Committee

 

Arthur H. Goldberg (Chairman)
Stephen R. Blank
Robert A. Meister
Matthew L. Ostrower
Michael A. Ward

 

During 2010, none of the Trust’s executive officers served on the board of directors or compensation committee (or committee performing equivalent functions) of any other company that had one or more executive officers serving on the Board or Compensation Committee.

 

Mr. Ward previously was an officer of the Trust; none of the other members of the Compensation Committee is or has been an officer or an employee of the Trust.

 

Mr. James H. Smith served as Interim Chief Financial Officer until March 2010. Other than the Summary Compensation Table, Mr. Smith is excluded from all of the Named Executive Officer Compensation Tables because they are not applicable.

 

The table below summarizes the total compensation paid or earned by the named executive officers in 2010, 2009 and 2008.

 

 

 

 

Dennis Gershenson — full payment of health care premiums and life insurance premiums.

 

Gregory Andrews — moving and relocation expenses.

 

Frederick Zantello — housing allowance and mileage reimbursement of $43,041 and full payment of health care premiums.

 

Narrative Discussion of Summary Compensation Table

 

Employment Agreement — Mr. Gershenson and Mr. Andrews. See “Potential Payments Upon Termination or Change-in-Control” for a description of the material terms of such employment agreements. In particular, in connection with his hiring, Mr. Andrews received a one-time grant of 20,000 shares of restricted stock and 75,000 options, both of which vest over three years in equal installments on the anniversary dates of such grants.

 

James H. Smith. On November 17, 2009, the Trust appointed James H. Smith to serve as Interim Chief Financial Officer. The amounts noted above for 2009 and 2010 represent the amount that the Trust paid CFO Synergy, Inc., a consulting company for which Mr. James Smith serves as President, for Mr. Smith’s service as Interim Chief Financial Officer. The consulting agreement provided for payment of $275 per hour as well as reimbursement for specified expenses.

 

Gregory R. Andrews. Mr. Andrews was appointed Executive Vice President of Finance in February 2010 and became Chief Financial Officer and Secretary in March 2010. Mr. Andrews’s base salary earned in 2010 reflects a pro rata portion of his annual base salary. However, the Committee determined to pay him the full bonus amount instead of a pro rata portion.

 

Bonus. For 2008 and 2009, Mr. Gershenson received a discretionary bonus. For 2009, Mr. Gershenson’s discretionary bonus was paid all in cash and is reported in the “Bonus” column. For 2008, one-third of the bonus of Mr. Gershenson was paid in cash, with grant date fair value reflected in the “Bonus” column for 2008. The remaining two-thirds of such bonus was paid in restricted stock at the election of the Trust, and the grant date fair value is reflected in the “Stock Awards” column in 2009. In 2007, 100% of the annual bonus was paid in restricted stock, as well as an additional special bonus. Therefore no amounts were reported in the “Bonus” column for 2007 and the grant date fair value was reflected in the “Stock Awards” column in 2008.

 

Mr. Litzler, Mr. Zantello and Mr. Sullivan earned the discretionary cash bonuses specified above in the “Bonus” column for 2009 and 2010. For 2007 and 2008, 75% of such bonus was paid in cash, with such amounts reflected in the “Bonus” column for such years. The remaining 25% of such bonus for 2007 and 2008 was paid in restricted stock at the election of the Trust, and the grant date fair value is reflected in the “Stock Awards” column in 2009 and 2008, respectively, which reflects the year such shares were granted.

 

2008 Discretionary Grant of Restricted Stock. In addition to the amounts noted above, each named executive officer received a special discretionary grant of restricted stock on March 4, 2009 as part of their 2008 bonus, having a cash value of: Mr. Gershenson, $132,890; Mr. Litzler, $29,592; Mr. Zantello, $57,540; and Mr. Sullivan, $21,372. The grant date fair value is reflected in the “Stock Awards” column for 2009.

 

Long-Term Incentive Program. In 2010, the Committee re-implemented the Trust’s long-term incentive compensation program, with approved long-term incentive targets of 75% to 120% of base salary for the named executive officers, which generally is consistent with the historical long-term incentive program. The long-term incentive program consists of service-based restricted stock and performance-based restricted stock. In 2010, the Committee determined that service-based restricted stock grants and performance-based restricted stock grants each would correspond to 50% of the long-term incentive dollar target. The performance-based restricted stock is earned based on the achievement of specific performance measures over a period of three calendar years (with such measures established by the Committee at the beginning of the three-year period). For 2010 awards, the sole performance measure is relative total shareholder return over a three-year period. The achievement of 50^th percentile, 75^thpercentile and 90^th percentile and above corresponds to payouts of 100%, 150% and 200%, respectively, of the target incentive. There is a linear increase in payout between the performance levels.

 

There were no grants under the long-term incentive program for 2009 for named executive officers. In 2008, the Committee utilized the program noted above for 2010, although the Committee utilized FFO per diluted share as the performance goal.

 

2010 Discretionary Grant of Restricted Stock. In addition to the annual grant under the LTIP, Mr. Gershenson also received any additional 15,000 shares of service-based restricted stock and 15,000 shares of performance-based restricted stock. Further, Mr. Zantello received an additional 3,500 shares of service-based restricted stock.

Non-Equity Incentive Plan. The 2010 Executive Incentive Plan for the Trust’s Chief Executive Officer and Chief Financial Officer is based on the achievement of three performance objectives for 2010: funds from operations per share (40%), balance sheet improvement (debt-to-EBITDA ratio) (30%), and individual strategic goals (30%). The target bonus for the Chief Executive Officer and the Chief Financial Officer is 100% and 60% of base salary, respectively. Each of the components is analyzed independently of the others, with a threshold payout (50% of target incentive), target payout (100% of target incentive) or maximum payout (200% of target incentive) for each component.

 

Mr. Gershenson voluntarily reduced his bonus earned in 2010 by approximately $75,000, or 23%, in recognition of economic conditions and similar reductions imposed on other members of senior management.

 

The following table provides information about equity awards granted to the named executive officers in 2010.

 

 

 

 

Narrative Discussion of Grants of Plan-Based Awards in 2010 Table

 

Annual Bonus Program. The 2010 Executive Incentive Plan for the Trust’s Chief Executive Officer and Chief Financial Officer was based on the achievement of three performance objectives for 2010: funds from operations per share (40%), balance sheet improvement (debt to EBITDA ratio) (30%), and individual strategic goals (30%). The target bonus for the Chief Executive Officer and the Chief Financial Officer is 100% and 60% of base salary, respectively. Each of the components is analyzed independently of the others and has a payout range of 50% to 200% multiplied by the component weighting. The amounts earned in 2010 are reported in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.”

 

Long-Term Incentive Plan. The Trust’s long-term incentive compensation program provides for target payouts of 75% to 120% of base salary for the named executive officers. In 2010, the Committee determined that service-based restricted stock grants and performance-based restricted stock grants each would correspond to 50% of the long-term incentive dollar target.

 

Each service-based restricted share represents the right to receive upon vesting one Share. The service-based restricted shares vest on the first through fifth anniversaries of the grant date.

The performance-based restricted stock is earned based on the achievement of specific performance measures over a period of three calendar years (with such measures established by the Committee at the beginning of the three-year period). For 2010 awards, the sole performance measure is relative total shareholder return over a three-year period compared to a 12-company peer group. The achievement of 50^th percentile, 75^th percentile and 90^th percentile and above corresponds to payouts of 100%, 150% and 200%, respectively, of the target incentive. There is a linear increase in payout between the performance levels.

 

Mr. Gershenson — Discretionary Equity Grant. The 15,000 shares of service-based restricted stock and 15,000 shares of performance-based restricted stock were granted on the same date as the other long-term incentive compensation grants and have the same vesting conditions. Therefore, the table presents this discretionary grant together with Mr. Gershenson’s long-term incentive equity grants.

 

Mr. Andrews — Employment Grants. The shares and options granted in connection with Mr. Andrews’ employment vest on a pro rata basis on the first through third anniversaries of the grant date.

 

Mr. Zantello — Discretionary Equity Grant. The shares of service-based restricted stock granted on June 7, 2010 vest on the first anniversary of the grant date.

 

The following table provides information on the holdings of option and stock awards by the named executive officers as of December 31, 2010.